February 25, 2024

According to the CEO of DBS, Piyush Gupta, central banks around the world should begin regulating virtual currencies and downplay worries that cryptos would supersede fiat money. DBS Bank is among Singapore’s major investment banks.

“Trying to regulate it outside the conventional banking framework is a terrible idea because you want to send it into an uncontrolled environment. By so doing, there will be no way to put safety measures in place,” he remarked at a Global Business Conference. 

Since no one knows those in possession of cryptocurrencies, it is vulnerable to misappropriation. For this reason, the governor of RBI is concerned and monetary systems all around the globe have raised KYC and AML concerns regarding cryptocurrency.

Gupta’s recommendation comes after the Singapore Monetary Authority said that it’s looking into methods that will allow it to regulate virtual currencies in the state appropriately.

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The DBS CEO also rejected claims that virtual currencies and NFTs or stablecoins will replace fiat currency. He highlighted that the widespread adoption of electronic currencies (CBDC) might have many beneficial applications. He told listeners in a discussion;

“I don’t imagine cryptos will become a globally accepted means of exchange, but they can act as a substitute to gold.” The other major issue is price volatility, and this is because the price fluctuates over time. Today, digital currencies are a possible source of speculative value; however, they are unlikely to be a legal tender worldwide.”

Uses Of CBDC

One usage of CBDC, as stated by Gupta, is disintermediation present in the financial system. However, he said that CBDCs have their issues, “but one way to distribute the CBDC is to send it to citizens that creates an account with the nation’s central bank.”

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“The disadvantage is that it will remove the need for an intermediary in the present financial system. As a result, you place the obligation and responsibility for credit creation solely on the central banks, and this is something they are avoiding,” Gupta explained.

When central banks worldwide issued their digital currencies as fiat money, the virtual currencies gained another usage. “Electronic currency will arrive, some countries will attempt to retail it, but I sense there is a stronger use for bulk CBDCs, especially for cross-border payment,” he continued.

According to him, financial organizations and monetary authorities should look into methods to study and exploit the capabilities of blockchain tech.

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“At the heart of cryptocurrency or digital currency is blockchain, which allows you to build credibility without the need for a middleman. Understanding that tech has the potential to transform the concept into a decentralized model is a critical concept,” he added.

Singapore’s Monetary Authority Thinking About Crypto Rules

The country’s Monetary Authority stated last week that it would be announcing new regulations and procedures for crypto trading.

“The agency has repeatedly advised the community that dealing in cryptos is a high-risk financial product that is not suitable for wide usage,” a representative stated. Other countries agree and have implemented restrictions concerning ads by the cryptocurrency company.

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